By Omodele Adigun
The Federal Government on Friday declared that allocations to state governments have more than doubled since President Bola Tinubu scrapped petrol subsidy in May 2023.
Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun, disclosed this in Abuja at the National Health Financing Dialogue. He insisted that the controversial reform, though painful, restored fiscal stability across federal and state levels.
Before the reform, subsidy payments drained 2.5 per cent of Nigeria’s Gross Domestic Product (GDP), with benefits largely cornered by a few individuals and foreign profiteers.
“The removal of subsidy was a tough decision, but it has restored fiscal balance, not just at the federal level. The states now have double the kind of funds they had before, enabling them to meet their obligations in critical sectors, including health and education,” Edun stated.
In a statement signed by the minister, he warned that the subsidy had for years deprived Nigeria of investment in healthcare, infrastructure, and human capital development.
Following the President’s announcement in May 2023, petrol prices shot above N1,000 per litre before retreating slightly to below N900 in recent weeks. The decision fuelled economic hardship, pushing inflation to 27 per cent in 2024 before easing to 21.88 per cent in July 2025.
Food inflation, which hit 39.53 per cent year-on-year in July 2024, moderated to 22.74 per cent last July .
Despite the revenue surge, critics argue that state governments have failed to translate the windfall into tangible improvements in citizens’ lives. Poverty and unemployment remain entrenched, while essential services in health and education continue to struggle.
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